Posted by: Rob Hof on January 20, 2008

Yahoo CEO Jerry Yang is reviewing whether to lay off up to 20% of the embattled company’s 14,000-person [corrected] staff, according to tips reported by Henry Blodget at Silicon Alley Insider, Rafat Ali at Paidcontent.org, and Mike Arrington at TechCrunch.

Rafat thinks the cuts could come mostly from European operations, given Yang’s oblique references in recent months. Analysts have been speculating and even suggesting that Yahoo could spin off its search ad operations, which despite Yahoo’s Panama makeover last year have kept losing share to Google.

I’m betting Yahoo’s customers don’t want one of the last two remaining (with Microsoft) competitors to Google in search advertising to throw in the towel, weak as they are. And I remain a little surprised that so many people think Yahoo needs such radical surgery when it’s still got a fairly strong position on the Web overall and is profitable. But maybe Yahoo’s flagging stock price, relatively slow growth, lack of a strong strategic message, and accompanying investor pressure—and when you add those up, granted, it’s hard to be real optimistic—might give Yang little choice.

If he goes ahead with the cuts, Yang at least won’t be viewed as someone who’s not tough enough to make the hard decisions.

Update: As others have, I’ve gotten word from a source that the layoffs would more likely number in the high hundreds, perhaps 700 or so, or about 5% of staff. But as of this moment, I gather the number hasn’t been decided.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.